Scandals Confront Military Security Industryby David Phinney, Special to CorpWatchNovember 29th, 2005

Wherever Tim Spicer turns up, he carries the kind of baggage that gives the private military business a bad name. An internet video showing private contractors shooting at civilian cars in Iraq, loosely linked to his company, has ignited a firestorm about unregulated gun-wielding security convoys, escorting reconstruction or government advisors, roaming the country. [See Box]

This latest scandal comes at a time when the military security industry is reaping huge profits from the gun-carrying business in conflict zones around the world once dominated by rogue soldiers of fortune. As thousands of armed guards, working largely under U.S. contracts, travel the roads of Iraq, the industry is seeking respectability though a Washington trade group -- the International Peace Operations Association (IPOA).

The group calls itself “the most ethical and effective voice of the Peace and Stability Industry,” pledged to ensure that “their capabilities are not misused or abused.” Its members include industry heavy hitters like ArmorGroup, Blackwater, Hart, MPRI, the Olive Group and Triple Canopy.

Shooting Gallery

The grainy video (click to download) shows the view of an Iraqi street from the back of a moving vehicle. The long barrel of a gun, held by someone inside the vehicle, swings across the frame and viewers see the effect of bullets, apparently fired from the vehicle, spraying civilian cars coming up behind. Bloggers claim that the man with the gun is Danny Heydenreycher, a South African employee of Aegis at Camp Victory.

In one of the four separate incidents, after shots are fired, viewers see a Mercedes car crash into a taxi; passengers flee from the taxi, but no movement is seen in the Mercedes, suggesting that the passengers were injured or killed.

According to Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” the people driving the vehicle are part of a convoy of private military contractors. The video was originally posted on an unofficial Web site run by a disgruntled contractor working for Aegis Defence Services. (The website claims to be a voice for to "the men on the ground who are the heart and soul of the company.” The video has been deleted from the site but has taken on a life of its own in the blogosphere.)

Aegis holds several sweeping Pentagon contracts in Iraq worth over $430 million. In published news reports, Tim Spicer, the head of Aegis, insists that an internal investigation of the matter is ongoing and notes that there is no evidence that the video involved Aegis. Authorities in Baghdad are also apparently looking into the video, which has torched a firestorm of criticism as bloggers ponder if the United States uses private contractors who shoot unarmed Iraqis.

Pelton, who spent a month with armed convoys running the road from the Green Zone headquarters in Iraq of the U.S. military and government to the Baghdad International Airport, said he understands the public concerns over the conduct of armed private security companies working in Iraq. Private security companies are known to regularly fire guns in the streets as a warning to clear traffic and to caution vehicles coming up from behind.

“The US military considers all of Iraq a war zone,” said Pelton. “Contractors are the frequent target of car bombs, but there are rules and professional standards. Two of the four incidents are trigger happy contractors. It’s a good bet that all of the victims of the incidents will generate some type of retribution against the security industry. Even in a war zone, there is a clear line between professional security providers and amateurs. This video shows how not to conduct vehicle security.”

Another source who is familiar with private security operators in Iraq says that it is nearly impossible to tell the difference between a hostile vehicle carrying a bomb and innocent Iraqi civilians driving toward you. Under rules issued by the Pentagon, any private security team member is expected to wave off a possible threat, fire warning shots and then shoot at the vehicle’s engine to stop it. Team members are also allowed to shoot to kill as the last resort in a situation of pressing circumstances.

“Some team members are scared all the time and shoot a lot, some are scared once and a while and shoot once and a while, some are never scared and never shoot,” the source said. “You can never tell when you are about to get blown up, that’s why some contractors get blown up or they would have shot the driver.”

But at the same time as the industry is evolving -- becoming more corporate, more visible, and more concerned with projecting a responsible image -- private military contractors are facing scandal like the new video in circulation and unprecedented scrutiny from the news media. Some executives recognize that if the companies don’t regulate themselves, someone else might. The public, and many policymakers, sees contractors through an image shaped by accusations of war crimes, rogue operations, and photos of private contractors engaged in torture at Abu Ghraib.

To some, Tim Spicer, a Falklands Islands war veteran with weathered good looks, embodies the industry’s old rogue image. During the past 10 years, the 53-year-old former Scots Guard lieutenant colonel racked up a gun-for-hire resume littered with questionable deals and testaments to poor judgment.

Highlights of his globe-trotting career include sparking international scandals in Southeast Asia and flaunting international bans on arms trafficking in West Africa. A contract held by his now defunct company, Sandline, precipitated the toppling of the very government that hired it: Papua New Guinea. When Sandline mounted a $10 million armed operation in Sierra Leone, initially bankrolled behind-the-scenes by a shady fugitive wanted for embezzlement, Spicer was accused of legal and financial shenanigans.

And now, to the chagrin of many IPOA members, Spicer wants to join the organization. His membership bid comes just as the IPOA is trying to reposition the industry as for-profit providers of armed men as peace keepers.

In a vote several months ago, IPOA rejected Spicer’s company Aegis Defence Services. A second bid to join the only trade organization for security contractors is causing a private little war inside the IPOA sandbox.

“This is an issue about making a stand. The organization shouldn’t back away even if blood is spilled on the carpet,” said an executive in a major security company who cited commercial reasons for insisting on anonymity. “If the IPOA doesn’t get it right, it will come back to haunt it.”

Spicer was “surprised” by IPOA’s initial rejection “especially since we were invited to apply,” he said in a recent telephone interview. He flatly denies rumors that he threatened legal action against the group.

Complicating matters is the fact that London-based Aegis holds the Pentagon’s largest private security contract in Iraq. Established in September 2002, by Spicer, who owns 40 percent of the company and is its chair and chief executive, the fledgling company made headlines in June 2004 when it landed the $293-million three year contract in Iraq despite having no experience in the Middle East. The contract has since been expanded for another year, making it now worth $430 million.

Under the three-year agreement, Aegis wields considerable power and influence over the safety and effectiveness of the other security companies including many IPOA members. Spicer’s company provides daily analysis on counter-insurgency and personal protection to government officials. It also holds sweeping responsibility for electronically coordinating employees of other security convoys traveling around Iraq, working for companies with reconstruction or government contracts. The scores of contractors under Aegis’s control constitute a workforce the size to a military division; and may rank as the largest corporate military ever assembled.

Saving Africa

Doug Brooks, IPOA’s president, a passionate defender of private military contractors, had no comment about the internal spat over Spicer and declined to reveal who re-invited Aegis or why its first application was rejected. In the industry’s rough and tumble past, Brooks had defended Spicer’s former company, Sandline, telling CorpWatch more than a year ago that the company had helped save thousands of lives in Sierra Leone.

"Sandline was remarkably effective," Brooks said. "Their goal of restoring the democratically elected government was achieved. They maintained a low profile but played a critical role in the success."

The lanky 43-year-old head of IPOA is more circumspect these days. “This is an internal matter,” Brooks said. “But I do think we should try to be inclusive.”

Brooks, a son of a professor of African studies with an unfinished doctorate in international security, says his long-time interest in Africa inspired him to start IPOA in April 2001. At the South African Institute of International Affairs, and during years of teaching and traveling in Africa, he says he saw impoverished nations with ill-equipped armies struggle against violent insurrections as developed nations stood by, unwilling commit their own forces.

The hands-off policy allowed butchers to storm across the continent while United Nations peacekeepers frequently fell short of the task, he said. For example, in 2000, Sierra Leonan rebels routed 17,000 poorly-trained and equipped UN security troops, and then rampaged through the countryside dismembering unarmed citizens and creating hundreds of thousands of refugees.

"We still don’t know how many died," Brooks said. "But I spoke to hundreds of Sierra Leonans about the failure of the UN peacekeeping force. They are all very vocal and pissed off.

It was the private companies such as Pacific Architects & Engineers (PAE) and International Charter Incorporated (ICI) of Oregon (now IPOA members) that "stayed put," providing airplanes and logistics support for the local military and, according to Brooks, gained the trust of the people.

Spicer defends his work in Sierra Leone and Papua New Guinea as “defending democratically elected government that were removed in violent coups.”

Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” offers a different take, noting that Sandline's predecessor, Executive Outcomes, had intervened in Sierra Leone in 1995 and saved lives.

"But the Sandline "Arms to Africa" debacle in 1997 did little to save lives. It's a common confusion that Spicer allows," he says. "In PNG Spicer's involvement actually ended up deposing a democratically elected government. Both jobs resulted in resource concessions being granted to Sandline owners or backers."

Whatever the industry’s past faults, Brooks believes in its future. It was the willingness of private military companies to do the work that developed nations refuse, he said, that led him to found IPOA and seek the support of policy makers.

"I think the industry is a huge resource that should be tapped,” explained Brooks, who represents the industry at defense contracting conferences and meetings with the State Department. "There are times when government won’t send their own troops, but they are willing to write a check."

Business Booms in Iraq

Check writing is exactly what has been happening in Iraq, where billions of dollars in new Pentagon contracts have supercharged the growth of private security companies and spawned multimillion-dollar companies overnight. Private security accounts for at least one quarter of the $24 billion earmarked for rebuilding, according to a recent report by the U.S. Special Inspector General for Iraq Reconstruction (SIGIR). Much of this money goes to the estimated 25,000 to 30,000 armed contractors who were swiftly sucked up from a global pool of ex-military and law enforcement personnel.

The sharp demand for personnel has led to varied (some say lower) standards of training and military experience in workers from dozens of countries including the Britain, Colombia, Chile, El Salvador, Fiji, Nepal, Peru, Serbia, South Africa, and the United States.

Tim Spicer

Controversy follows Tim Spicer as surely as contractors follow armies into war. His former private military company, Sandline International, which was involved in several international scandals in the late 1990s, continues to be a classic case study of what can go wrong when private military companies wage war.

The government of Papua, New Guinea hired Sandline in 1997 to quell a nine-year rebellion on the island of Bougainville and to secure one of the world’s largest copper mines. The plan backfired after local military leaders learned of the deal and staged a coup. (Spicer’s contract for $36 million dollars -- more than the country’s annual budget -- included providing two Soviet-made attack helicopters, several assault helicopters, six rocket launchers and grenade launchers, according to research by Brookings Institute military expert Peter Singer.)

Riots broke out, Prime Minister Julian Chan stepped down, and the government imploded. Soldiers apprehended Spicer at gunpoint, jailed him on a weapons charge, and then booted him out of the country amidst a fog of allegations that public officials had been bribed.

Despite botching the operation, Sandline demanded and collected an outstanding $18 million balance from new government in Papua New Guinea.

Sandline next appeared in Sierra Leone in 1998 as part of an effort to restore the government of ousted President Ahmad Tejan Kabbah. Spicer was accused of violating a United Nations and United Kingdom embargo on arms smuggling – punishable by up to seven years in prison. Prior to receiving the $10 million contract, Spicer is reported to have accepted $70,000 businessman Rakesh Saxena to bankroll a Sandline expedition to recapture Saxena’s Siera Leonan diamond and bauxite mining interests. At the time, the Indian-born Thai national was awaiting extradition to Thailand to face charges of embezzlement from a bank in Thailand and traveling on the passport of a dead Serb.

Sandline’s shipment of 30 tons of arms to Sierra Leone ignited a news storm in Britain after Spicer disclosed that British and U.S. officials had secretly encouraged him. The “Arms-to-Africa Affair,” as it came to be known, rocked Tony Blair’s government, triggered a high-profile British House of Commons investigation, forced the resignation of former British high commissioner in Sierra Leone, Peter Penfold, and elicited unsuccessful calls for Foreign Secretary Robin Cook to step down.

“Our attempts to uncover the structure, ownership, and business connections of Sandline were met with extraordinarily evasive answers by Mr Spicer,” states a government report. “A follow-up memorandum from Mr. Spicer was thin and opaque—and failed to provide a number of promised answers. Nevertheless, Mr. Spicer's business is not unlawful, and he is a British citizen with a record of service in the armed forces.”

In April 2004, around the time that Aegis received its mammoth security contract in Iraq, Sandline officially shut down. A notice on its website explained that the company was going out of business because of waning government support for peacekeeping missions. “Without such support, the ability of Sandline to make a positive difference in countries where there is widespread brutality and genocidal behavior is materially diminished.”

Both the Iraqi and U.S. governments have complained about the training and behavior of private contractors in Iraq. In an April performance review, SIGIR faulted Aegis’s compliance in five areas of its contract, including inadequate employee background checks and slack verification of qualifications and training. After sampling records of 20 of Aegis’s 125 Iraqi employees, the review concluded that the company conducted no police checks on 18 and failed to interview six; there were no records at all for two of the men.

"There is no assurance that Aegis is providing the best possible safety and security for government and reconstruction contractor personnel and facilities," concluded the audit, which recommended stricter enforcement of the contract.

The Iraqi Ministry of Interior has repeatedly complained about reckless gunplay by the private security convoys that barrel through densely populated cities with weapons waving out the windows to clear the streets.

Even U.S. military officials have chaffed that the increasing reports of indiscriminate shootings and other war crimes endangers their own troops. However, under an order issued by the Coalition Provisional Authority before the U.S. government officially departed Iraq in June 2004, all private military contractors are immune from prosecution in Iraq.

“They shoot people, and someone else has to deal with the aftermath. It happens all over the place,” Marine Brigadier General Karl R. Horst told TheWashington Post in a September 10th story. “These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force.”

Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad, said that between May and July, he tracked at least a dozen shootings of civilians by contractors.

Some private contractors argue that the dangers of a war zone necessitate shooting at, and possibly killing, people who turn out to be civilians. Since the violent resistance in Iraq makes little distinction between them and enlisted personnel, they say, contractors must act aggressively for their own protection.

The military itself has given mixed signal to private contractors in Iraq. In a major incident in May 2005, 19 security contractors working for Zapata Engineering were detained for allegedly shooting recklessly in the streets of Fallujah and nearly hitting U.S. forces. Later Marines searched, roughed up members of the convoy, and jailed them for three days without charges.

The Zapata contractors were released, but complained that the U.S. military had blacklisted and banished from working in the security business in Iraq -- although none ever was charged with a crime.

Another U.S. Army investigation last spring was based on an anonymous four-page letter detailing allegations of wrongdoing by the contractor USIS, according to a recent story in TheLos Angeles Times. The letter writer accused USIS of deliberately reducing the number of trainers to increase its profit margin and detailed two incidents in which USIS contractors allegedly had witnessed or participated in the killing of Iraqis during the assault on Fallujah a year ago. (Private security contractors are not allowed to conduct offensive operations.)

The letter also claims that a USIS employee saw Iraqi police trainees kill two innocent Iraqi civilians, then covered it up. A USIS manager "did not want it reported because he thought it would put his contract at risk," according to the letter.

The head of the probe, Army Colonel Ted Westhusing, reported the allegations to his superiors, but told them that he believed USIS was complying with the terms of its contract. U.S. officials investigated and found "no contractual violations," and “these allegations to be unfounded, according to TheLos Angeles Times. (Westhusing subsequently committed suicide, distraught over his experiences in Iraq)

Marriage Rules Without Divorce or Alimony

Brooks and his IPOA members know full well how such incidents and grievances feed into the image of private security workers as macho mercenaries unbound by laws of war or decency and loyal only to cash. IPOA has crafted a code of conduct -- now in its 10th revision -- that Brooks believes establishes self-regulation among IPOA members and "a deep sense of responsibility."

The rules call for "effective legal accountability," transparency, and dedication to the “greatest benefit of humanity.” IPOA members pledge to observe international human rights laws; cooperate with investigations of contract violations; and work only for legitimate, recognized governments, international organizations, non-governmental organizations, and lawful private companies. (Pelton says the rules resemble the "vows of marriage and without the divorce or alimony" noting that it is a self-adminstered code with no enforcement.)

IPOA now boasts of 18 member companies. All are in the business of war or post-conflict stabilization. Most are active in Iraq, specialize in providing armed security forces or training, and are staffed by former military personnel. Others provide expertise a wide variety of tasks traditionally handled by the military: de-mining, building, transportation, and equipment maintenance.

The conflicting views and the code’s legitimacy are now being tested behind closed doors as IPOA considers membership for Aegis. Given the track record of many private military contractors around the world, it may be that IPOA’s rejection of Spicer’s application has more to do with old-fashioned competition than with new-found principles. Indeed Spicer believes that criticism of him and the rejection of his membership bid "may be commercially and politically motivated.”

Mark Whyte, an executive with the British security company, Pilgrims, whose company protects business and media clients in Iraq, tends to agree with that conclusion.

“While I'm no personal fan of Spicer, this is little more than professional jealousy in my view,” Whyte said.

Pilgrims does not belong to IPOA and Whyte takes issue with some of the organization’s more politically-charged goals of nation building, but adds: “If you look at the values espoused by IPOA, I would say that Aegis is one of the few companies that actually try to live up to them in Baghdad.”

Whether that assessment is accurate or not, Aegis is certainly aiming to position itself as a respectable member of a legitimate industry. In addition to its bid to join IPOA, it has hired former U.S. and British government figures including Robert McFarlane, former national security adviser to President Ronald Reagan, Lord Peter Anthony Inge, former British chief of defense staff, and Nicholas Soames, former British armed forces minister. All hold advisory or non-executive positions.

"This is only just becoming an industry,” Mark Bullough, Aegis managing director, told the Financial Times on November 4, referring to the new appointments. “There has been a question mark over how respectable it is. Certainly the reassurance of the non-executive names offers an endorsement of our company and points of reference for people not used to dealing with the sector.”

David Phinney is a journalist and broadcaster based in Washington, DC, whose work has appeared in The Los Angeles Times, New York Times and on ABC and PBS. He can be contacted at: phinneydavid@yahoo.com.